F5Â NetworksÂ (Nasdaq: FFIV)Â has agreed to acquire Santa Clara, Calif.-based Shape Security for approximately $1B in cash as both companies aim to help government and enterprise customersÂ secure digital experience with integrated offerings.
The boards of directors of both companies have approved the transaction, which is expected to conclude in the first quarter of calendar year 2020, F5 said Thursday.
Shapeâs application protection technology is designed to distinguish good traffic from bad by leveraging cloud-based analytics and assessing the flow of data from the user into the application. The platform seeks to help public and private sector organizations avoidÂ sophisticated bots or fraudulent transactions.
âWe will deliver end-to-end application protection, which means revenue generating, brand-anchoring applications are protected from the point at which they are created through to the point where consumers interact with themâfrom code to customer,â said Francois Locoh-Donou, president and CEO of F5.
He added Shapeâs artificial intelligence and machine learning capabilities will expand F5âs application services portfolio and ability to protect clientsâ apps in multicloud environments.
Derek Smith, co-founder and CEO of Shape, and his fellow executivesÂ will serve in key management positions at F5 upon the dealâs completion.
The acquisition will accelerate F5âs move to software as a service- and software-driven business model and is expected to be accretive to the companyâs free cash flow per share within a year of the dealâs closing and reach non-GAAP earnings per share within two years of the transactionâs completion.
F5 said it will use cash on hand and Senior Unsecured Term Loan A worth $400M to fund the transaction.
The Seattle-based company will continue to operate Shape in Santa Clara.
Foros and JP Morgan served as F5âs financial advisers in the transaction, while Skadden, Arps, Slate, Meagher & Flom acted as the companyâs legal adviser. Qatalyst Partners advised Shape on the dealâs financial aspect and Sidley Austin served as the firmâs legal counsel.